New Delhi: Concerned over the corporate affairs ministry’s restriction on Limited Liability Partnerships or LLPs, the ministry has withdrawn its directions, which were restricted from manufacturing and allied activities in corporate sectors in the country.
The ministry is all set to implement the Limited Liability Partnership Act in which the corporate sector can get a relief from the previous restrictions with an immediate effect. The move of ministry came when many organisations including the Institute of Company Secretaries of India (ICSI) flagged concerns about it to the ministry.
The corporate affairs ministry, however, clarified in a message on its website, “Manufacturing & allied activities were restricted in LLPs vide OM (Office Memorandum)... dated 06.03.2019. This OM invoking the restriction regarding manufacturing & allied activities has been withdrawn with immediate effect.”
In the memorandum issued on March 6, the ministry had said that LLPs as body corporates have been set up for the purposes of carrying out business activities related to the service sector. “Incorporation of LLPs and conversion of LLPs with the proposed business activities, including manufacturing & allied activities are not be allowed,” it had said.
Consultancy Corporate Professionals’ Founder Pavan Kumar Vijay said there was a misinterpretation with the memorandum and that has now been rectified. “When the LLP Law came into existence, no where it was mentioned that LLPs were only for the purpose of services. That was a wrong interpretation,” he noted.
An LLP is a corporate business vehicle that provides benefits of limited liability while allowing its members the flexibility for organising their internal structure as a partnership, as per the ministry....